Mergers: the key to making them work

The success of a merger depends on how well the deal is communicated to staff, clients and the outside world. It also presupposes sufficient benefits to each to make it a message worth communicating.

Interbrand UK and Newell and Sorrell, which recently announced a merger, are well aware of the promotional opportunities the new group is presented with. “Something like this doesn’t happen often, and you want to make the most of it when it does,” says deputy chairman of the new group Tom Blackett.

When the merger officially kicks in on 1 January 1998, the new group will trade as Interbrand Newell and Sorrell, under a new logo. Blackett would not specify how he will promote the deal between now and then.

But if he has done his job properly, the bulk of his work will already be behind him. To be effective, communication must be managed from the outset, says Ian Cochrane of design business consultancy Tice Group. He has managed many mergers and acquisitions – which essentially confer the same opportunities for promotion and dangers to avoid.

“I would say about 80 per cent of mergers and acquisitions in the industry fail, because they are not in the interest of their clients but are to increase market share or cut costs,” says Cochrane. He believes many consultancies have learned from the mistakes made in the Eighties and are now brokering more suitable moves.

He says the merger three years ago between annual report specialist Citigate and identity group Lloyd Northover was a good move for both, because it married two complementary specialists, benefiting their clients, while working on a practical level, given the logistical and cultural match between the two groups.

Citigate Lloyd Northover has now expanded further, acquiring US group Bass Yager to increase its foothold in that market. The acquired group will trade as Bass Yager Citigate.

If a merger satisfies the above criteria it should go ahead, and the communication process with staff should begin immediately.

Mark Rollinson is director of Marsteller Giant, formed in May when corporate communications agency Burston-Marsteller took over design consultant Giant. “You have to persuade staff of the merits of the opportunity and inform them where they will stand in the new operation – that their jobs are safe and so on,” says Rollinson. Only then is it time to approach their existing clients.

“Controlling a merger can be an exercise in damage limitation. Many existing clients worry the changes may alter its relationship with the consultancy,” says Tim Greenhill of Basten Greenhill Andrews, formed in 1986 when a market research agency merged with a design consultancy.

The design group must impress upon its client the advantages of the merger and reassure them that any fears – bad communications between the newly-weds, incompatible work practices, or unsettled staff – are unwarranted.

The merger can also be used as an opportunity to win new clients, says Bill Wallsgrove, creative director and partner of Coleman Planet and Partners, formed in June this year when US packaging designer Coleman Group bought out part of structural packaging specialist Giant.

“We targeted some that had rejected Planet in the past and some we hadn’t talked to before, people we thought might be interested in our new package,” says Wallsgrove. This is done primarily through phone-calls, direct mail and presentations to the client.

If you have so far managed to keep the story from the press, it is now time to give them a call. The design and marketing press are the best targets since this promotes the new group within the industry making it easier to attract good quality staff in the future. The broader business press is also a good target, with WPP and Newell and Sorrell making it into the Financial Times through their deals with Addison and Interbrand respectively.

Having communicated the merger, the next stage is the day-to-day management of the newly created brand. Existing clients will always need reassurance and new clients can continually be sought as the new group produces a greater diversity of work.

Which of these deals did you notice?

June:

Burston-Marsteller acquires Giant, and Marsteller Giant is formed

July:

Diefenbach Elkins acquires Davies Baron, which retains its name

Grandfield Corporate Design splits from PR firm Grandfield to merge with McBride’s. McBride’s & Grandfield is formed

August:

Revolution acquires Torres

WPP group acquires Addison Design Company

McBains acquires Horseman Cooke to form Horseman Cooke McBains

Evolution Design merges with Creative Umbrella to form Evolution Design and Marketing

September:

Touchpaper Design merges with Northern Xposure to form Xplosive

October:

Interbrand UK and Newell and Sorrell merge to form Interbrand Newell and Sorrell

Lloyd Northover Citigate acquires Bass Yager, to form Bass Yager Citigate